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By XE Market Analysis June 13, 2018 3:42 pm
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    XE Market Analysis: Asia - Jun 13, 2018

    The DXY topped at seven session highs of 94.01 after the Fed raised interest rates, as-expected. The index had bottomed at 93.55 after the London close. The dollar rallied following the FOMC, taking EUR-USD to lows of 1.1725, from near 1.1790, and USD-JPY to 110.80 from near 110.40. The FOMC statement cited the strong labor market for its hike rationale. In addition, the FOMC's median estimate now calls for a total of 4 rate hikes this year, from 3 previously.

    [EUR, USD]
    EUR-USD was steady through much of the session, as traders waited on the FOMC announcement. The pairing idled in the upper 1.17s into the Fed, then fell back toward 1.1725 when the rate hike was announced. The euro is likely to settle into narrow trading ranges ahead of Thursday's ECB meeting.

    [USD, JPY]
    USD-JPY idled between 110.35 and 110.55 through the morning session, before reacting to the Fed rate hike, which took the pairing to 110.84 highs. The impact was short lived however, as the dollar pulled back, leaving USD-JPY under 110.60.

    [GBP, USD]
    Cable topped at 1.3390 in cautious pre-Fed announcement trading, rallying from the eight-day low it saw at 1.3310 during the London AM Session. The pairing later fell back to 1.3320 after the Fed raised rates, as-expected. We still see directional risks as being greater to the downside than to the upside, seeing scope for revisit of the May low at 1.3204. UK markets are likely to recommence a positional adjustment to a run of sub-forecast data this week, most notably an unexpected deceleration in wage growth, a metric being closely monitored by the BoE.

    [USD, CHF]
    EUR-CHF has softened back some after printing a three-week high at 1.1657 on Monday. The gains tagged EUR-USD gains as markets discount the ECB announcing the end of QE at its policy meeting this Thursday. The recent phase of euro weakness saw the cross lose over 4% from the 41-month high that was printed a month ago at 1.2005, which was the summit of an 11-month rally phase, and which in turn was a reflection of what had been -- before recently -- a sense of abating existential risks that the Eurozone was facing. The jury will remain out about how market friendly Italy's new government turns out to be.

    [USD, CAD]
    USD-CAD touched session lows of 1.2956 in the aftermath of the EIA reported crude oil inventory draw, coming from opening highs of 1.3031. The CAD recovered from the seven-session highs of 1.3046 seen overnight, as tensions between Trump and Trudeau fade some, and are replaced with some hope on the NAFTA front, as Canada's foreign affairs minister meets with U.S. lawmakers in Washington. NAFTA negotiations continue, and as long as that remains the case, CAD downside may be limited going forward. The pairing advanced to 1.3052 after the Fed raised rates, as was expected.

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